Updated from 11:53 a.m. EDTPrices of nickel were soaring to new highs Tuesday as available supplies of the metal crept lower. Spot nickel was trading at approximately $26,800 a metric ton, off the high's for the day, but still up over 7% as stocks of the metal on the London Metal Exchange (LME) slipped 889 tons to 8,904. "There are no particular reasons why prices should stop here," says Neil Buxton, managing director of GFMS, a London-based specialty consulting company. "In the short term, there isn't enough nickel in the market." Although at some point consumers of the metal, mainly stainless steel producers, may start substituting less expensive materials, right now there seems to be "no relief in sight," Buxton adds. Steel producers can produce a form of stainless steel that uses less or even no nickel, but there tend to be durability concerns for such products. So far, however, steel mills have been able to pass nickel price increases through to the buyers, says Buxton. Meanwhile, Swiss miner Xstrata raised its bid for Canadian nickel miner Falconbridge ( FAL) to value the whole firm at approximately $20 billion, up from $18 billion. Shares of Falconbridge were recently trading up over 1%, as were those of Canada's other nickel miner Inco ( N). Inco and Falconbridge previously agreed to merge with massive U.S. copper producer Phelps Dodge ( PD), which was also trading slightly up. Falconbridge announced it would analyze the offer before responding to shareholders formally. Further exacerbating a tight market, the Bush administration yesterday said it would crack down on exports of the metal from Cuba, citing Castro's repressive regime receives half its foreign exchange income from sales of nickel, according to a report posted on the Toronto Globe and Mail's Web site. Copper futures were also strong, with prices rising 5.25 cents to $3.635 a pound on the Comex division of the New York Mercantile Exchange (NYMEX). Although LME stocks were reported up 2,265 tons to 92,225 tons, supply concerns surrounding a possible strike at Chile's massive Escondida copper mine served to boost prices.